<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd">
<html xmlns="http://www.w3.org/1999/xhtml">
<head>
<meta http-equiv="Content-Type" content="text/html; charset=UTF-8" />
<title>Untitled Document</title>
</head>

<body>
<a href="javascript:loadLinkedPage('support/learnhome.html')">Learn Home</a>
<div id="abt">
  <h1>Get Started in Investing</h1>
  <p id="by">From <a href="http://financialplan.about.com/bio/Deborah-Fowles-6323.htm" rel="author">Deborah Fowles</a>, former About.com Guide</p>
</div>
<h2>Just the Basics</h2>
<div id="aCtt">Do you hear co-workers or friends  talking about their investments and wonder how they got started? How'd  they come up with the money to invest? How'd they know what to invest  in? Many people don't know where to start, so they never start at all.
  <p> The vast amount of information about investing, the wide array of  investment choices, and the risk are intimidating and can prevent you  from taking those first steps. It doesn't have to be that way. You only  need to know a few basics in order to begin investing in your future. </p>
  <p> <strong>Basic Assumptions</strong></p>
  <p> First, some assumptions. This article assumes you have your credit card  debt under control. It makes no sense to invest in stocks, bonds, or  mutual funds if you have thousands of dollars in credit card debt at  interest rates in excess of 10%.  You don't have to be completely  debt-free, but you should be making serious inroads into your debt each  month, and you should be paying very low interest rates on that debt. </p>
  <p> This article also assumes you have an emergency fund of at least three  months worth of basic living expenses (preferably six months worth) in  case of a job loss, disability, etc. And finally, this article assumes  that if your employer offers a 401(k) plan, you're maximizing your  contribution and diversifying your investments in the plan. </p>
  <p> <strong>Where Do I Find the Money to Invest?</strong></p>
  <p> The first question for many people is &quot;where do I get the money to  invest?&quot; There are plenty of stock mutual funds that allow you to invest  with $500 or less. Use your next bonus at work, or your income tax  refund, or put in some overtime for extra cash. If you just can't come  up with $500 to start your portfolio, many funds will allow you to skip  the initial lump sum investment if you sign up for automatic monthly  withdrawals of $25 to $50 from your checking account. </p>
  <p> <strong>How Do I Choose an Investment?</strong></p>
  <p> You're ready for some long-term investments. How do you choose? The  first step is to know what your goals are. Are you saving for a house? A  college education? Retirement? The type of investment you choose will  depend on the amount of time available before you need the money. Stocks  are considered long-term investments, and it's best to plan on holding  stocks or stock mutual funds for five years or longer. If you need the  money sooner than this, you may reduce your return by cashing in when  the stock's value is down. </p>
  <p> <strong>How Do I Determine My Risk Tolerance?</strong></p>
  <p> Next, you need to know your risk tolerance. If you hide your money under  your mattress because you don't trust the bank, then you're probably  not going to feel comfortable investing in volatile technology stocks.  CNBC's Investment Risk Test can help you determine what level of risk  you can tolerate. </p>
  <p> <strong>How Do I Choose an Investment?</strong></p>
  <p> How do you decide where to put your money? Most experts recommend  spreading your money over several different types of investments to  reduce risk, because typically one type of investment does well when  another doesn't. For example, usually when returns on stocks and stock  mutual funds are high, returns on bonds are low, and vice versa. By  having money in both types of funds, you're more likely to get a decent  combined return if one category takes a downturn. Your asset allocation  should be tailored to your risk tolerance and the number of years before  you'll need to withdraw the money from your investments. </p>
  <p> For beginning investors, I recommend stock mutual funds instead of  stocks in individual companies. Why? It's all about risk. A well-chosen  stock mutual fund is less risky than an individual stock because mutual  funds invest in many companies, thus spreading out the risk. If one  company does poorly, the fund as a whole may still have a good return.  If you buy stock in one company and the company does poorly, you lose  money. </p>
  <p> <strong>Where Do I Find Information About Stocks and Mutual Funds?</strong></p>
  <p> Once you're ready to start choosing a fund to invest in, there are many  excellent Web sites to help you. My personal favorite is <a href="http://financialplan.about.com/cs/investing/a/www.morningstar.com" onclick="zT(this, '1/XJ')">Morningstar</a>, the respected mutual fund rating company. Their powerful <a href="http://screen.morningstar.com/FundSelector.html" onclick="zT(this, '1/XJ')">Fund Selector</a> allows you to search for mutual funds based on what's important to you.  For instance, if you want a list of funds that allow initial  investments of $500 or less, you can click on the appropriate box, leave  all the other boxes as is, and you'll get a list of funds that accept  initial investments of $500 or less, with their YTD return, expense  ratio (the amount of administrative and other expenses that the fund  manager deducts from your return each year), their Morningstar rating,  and more. Click on an individual fund name and get detailed information  about that fund. </p>
  <p> Once you've chosen a fund you feel comfortable with, call their 800  number and request a prospectus (a description of the fund, its  investments, and the returns it's earned in the past) and an investor's  kit. Fill out the form, send in your money, and voila! You're an  investor. </p>
</div>
<p>&nbsp;</p>
</body>
</html>
